Two leading economists who've studied this question — Bruce Babcock at Iowa State University and Wally Tyner at Purdue — agree with the EPA's analysis. "If you look at where gas prices are right now, it looks like it's in the interest of the gas companies to use ethanol," says Babcock.

Babcock says the agency made one additional assumption: That ethanol would have to get a lot more expensive before gasoline company decided to use less of it. The companies are locked in, at least for the short term, by their technical infrastructure: "The oil companies were told that they faced this mandate. They've done the best job possible to comply. They've configured their refineries to use that amount of ethanol, and it's costly for them to switch out of it."